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Goldman Sachs’ angry executive could cash in with lucrative book deal

Goldman Sachs shares tumbled in aftermath of blistering resignation letter but someone might still prosper — the executive himself, through a book deal.

By Ashante InfantryBusiness Reporter

Thu., March 15, 2012

Cue the TV appearances and the book deal: for a guy who is down on capitalism, former Goldman Sachs executive Greg Smith is poised to cash in.

A day after Smith’s resignation from the blue-chip firm with his blistering criticisms of the company published in TheNew York Times, Fox Business News reporter Charlie Gasparino said Smith had been contacted by a major publishing house seeking to get in touch with the former head of the investment bank’s U.S. equity derivatives business in Europe, the Middle East and Africa.

At the same time, Gasparino dismissed the South African-born Smith, who’d most recently worked out of Goldman’s London branch, as a disgruntled junior player.

“He’s been a 10-year vice-president,” Gasparino said of Smith, who had written that at Goldman “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.”

“That may sound good in middle America, but on Wall Street that means you didn’t make the (managing director) cut. That means, you know what, a little sour grapes there. At least that’s what the people at Goldman are saying.”

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Dirk Matten, who holds the Hewlett-Packard chair in corporate social responsibility at York University’s Schulich School of Business, was less scathing but equally skeptical about Smith’s lament that Goldman is focused away from its customers’ interests.

“Everything he says is known since the 2008 financial crisis started. In particular, his company has been fined,” Matten explained.

“He also doesn’t strike me as the holy man in that shark pond, because he has swum in it quite successfully for most his career. I wonder how many millions he made, and I haven’t yet read that he has given it all to charity.

“If you engage with these people socially, or a little bit out of their comfort zone, what you find they are very apologetic and slightly ashamed of their industry. Being an investment banker in 2012 is not the same cool thing as it was 10 years ago. They feel an urge to legitimize and justify what they do much more.”

Moreover, said Matten, it seems Smith is simply bellyaching about capitalism, and that he “was not, let’s say, some pinstriped mergers-and-acquisitions banker who did what some consider the real clean side of the business.

“Most ethicists would say that capitalism thrives on self-interest — albeit what then philosophers call enlightened self-interest — which basically means if I screw my customers all the time, they will just leave. . . . If Goldman Sachs were to constantly screw their clients they wouldn’t have much business.”

What is different is ordinary citizens’ diminished appetite for such ruminations, spurred by the Occupy Wall street protests.

“Talking about what is wrong with that industry is no longer something which is part of the business pages of the newspaper, but it is a big public concern,” Matten said. “The discussion now developing is an indicator that the public is alert to this, and banks and the question of how we regulate will be high on the agenda.”

It’s hard to say whether Smith’s dramatic resignation letter, which immediately went viral, sparking parodies and stirring up debate about Wall Street, will spawn a lucrative book deal and affect Goldman’s culture in the long run. But in the immediate aftermath on Wednesday, the company’s shares fell 3.4 per cent in New York trading, wiping out about $2.15 billion of its market value. They recovered much of that on Thursday, closing up 2.23 per cent at $123.06 (U.S.).

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